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MNI BRIEF: UK Inflation Surge Underlines BOE Dilemma

(MNI) London

UK inflation rose to a fresh 40-year high in June, with the consumer price index rising 9.4% year-on-year, the biggest increase since the comparable 10.2% increase recorded in February 1982, the Office for National Statistics said Wednesday. Once again, the increase outpaced expectations of City analysts, albeit marginally.

The data will make further difficult reading for the Bank of England ahead of the August policy meeting and could take the Monetary Policy Committee a step closer to a 50bps hike, although the increase is within the trajectory policymakers see towards an October 'peak' around 11%.

Once again, the pressure on consumer spending was highlighted by the continued year-on-year surge in the costs of running the household, with the Housing, Water, Electricity and Gas up 19.6% -- although it was flat on the month. Transport costs rose sharply on the month, up 2.3%, extending the annualised gain to 14.9%, driven by an increase in petrol prices to record highs

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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